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D196-Principles of Financial & Managerial Accounting Exam Questions and Answers 100% Pass A cell reference that remains constant when a formula is pasted into a new cell - Answer- Absolute Cell Reference An accounting record in which the results of transactions accumulated; shows increases, decreases, and a balance. - Answer- Account A system for providing quantitative, financial information about economic entities that is useful for making sound economic decisions. Accounting provides the means of recording and communicating business activities and the results of those activities. - Answer- Accounting The procedure for analyzing, recording, summarizing, and reporting the transactions of a business. - Answer- Accounting Cycle An algebraic equation that expresses the relationship between assets (resources), liabilities (obligations), and owner’s equity (net assets, or the residual interest in a business after all liabilities have been met): Assets = Liabilities + Owners’ Equity. - Answer- Accounting Equation Equity. The procedures and processes used by a business to analyze transactions, handle routine bookkeeping tasks, and structure information so it can be used to evaluate the performance and health of the business. - Answer- Accounting System A method of attributing overhead costs to products based on measurable factors that relate to activities that create overhead costs. - Answer- Activity-based Costing (ABC) Manufacturing costs other than direct materials and direct labor. - Answer- Actual Manufacturing Overhead A professional organization for CPAS in which membership is voluntary. - Answer- American Institute of Certified Public Accountants arli (AICPA) A document that summarizes the results of operations and financial status of a company for the past year and outlines future plans. - Answer- Annual Report The amount of the manufacturing overhead that is assigned to the goods produced. This is usually done by using a predetermined annual overhead rate. - Answer- Applied Manufacturing Overhead Financial statements that include information for both the current year and preceding year(s) that are prepared for users to identify any significant changes in particular items. - Answer- Comparative Financial Statements The difference between total sales and variable costs; the portion of sales revenue available to cover fixed costs and provide a profit. - Answer- Contribution Margin Sales Revenue - Variable cost - Answer- Contribution Margin (formula) Sales per unit - Variable cost per unit - Answer- Contribution Margin per Unit (formula) Contribution Margin per unit/sales per unit - Answer- Contribution Margin Ratio (formula) Revenues - Expenses - Answer- Net Income Formula Variable cost per unit/sales per unit - Answer- Variable Cost Ratio (formula) fixed costs / contribution margin per unit - Answer- Break Even in Units Fixed cost/contribution margin ratio - Answer- break even in dollars (Fixed cost + target income) / contribution margin per unit - Answer- Target Net Income (formula) Sales Revenue - Variable Cost - Fixed Cost = Profit - Answer- What is the C-V-P equation (basic formula) Costs over which a manager has direct authority and can change. - Answer- Controllable Costs Tracking the actual performance of a company. - Answer- Controlling An accountant who is specially trained to prepare and analyze accounting information for internal decision-making. - Answer- Cost Accountant The way a cost is affected by changes in activity levels. - Answer- Cost Behavior An organizational unit in which a manager has control over and is held accountable for cost performance. - Answer- Cost Center An organizational unit in which a manager has control over and is held accountable for cost performance. - Answer- Cost Center A numerical measure used to reflect the amount of a specific cost that is associated with a particular activity. - Answer- Cost drivers are An output of a business, such as a product, service, or division. - Answer- Cost Objects Total cost being generated by a specific overhead cost activity. - Answer- cost pool A difference between the actual cost and the budgeted cost. - Answer- Cost Variance A schedule supporting the income statement that summarizes the total cost of goods manufactured and transferred out of the work-inprocess inventory account during a period. These costs include direct materials, direct labor, and applied manufacturing overhead. - Answer- Cost of Goods Manufactured Statement A statement that sums the cost of goods sold for an accounting period based on the cost of goods sold formula. - Answer- Cost of Goods Sold Statement Techniques for determining how changes in revenues, costs, and level of activity affect the profitability of an organization. - Answer- Cost-volume-profit (C-V-P) Analysis Cash and other assets that are expected to
